Midwest ISO EIM Start-up and Exiting Issues Todd Ramey, Executive Director Market Administration March 7-8, 2011
Agenda Greetings and Introductions Introduction of the Midwest ISO Overview of the Midwest ISO Financing
Geographically, Midwest ISO is the largest regional transmission company and independent system operator in North America Alberta Electric System Operator (AESO) Ontario Independent Electricity System Operator New England ISO New York ISO Midwest ISO California ISO Southwest Power Pool PJM Interconnection Electric Reliability Council of Texas (ERCOT) 3
Midwest ISO s development originated with compliance to FERC Orders 888 and 889, and was propelled by value creation 4
Midwest ISO s role is focused on the following key areas Provide independent transmission system access Equal and non-discriminatory access Compliance with FERC requirements Deliver improved reliability coordination through efficient market operations Improved regional coordination Enhanced system reliability Lowest cost unit commitment, dispatch and congestion management Coordinate regional planning Integrated system planning Broader incorporation of renewables Foster platform for wholesale energy markets Encourage prudent infrastructure investments Facilitation of regulatory initiatives 5
As primary tools to efficiently manage generation and transmission assets, our markets keep energy prices as low as possible Market Summary Implications Day-Ahead Energy Market Forward energy and ancillary services Price differentiated by physical location Facilitate an efficient commitment of generation Real-Time Energy Market Financial Transmission Rights (FTR) Market Resource Adequacy Spot energy and ancillary services Price differentiated by physical location 5-minute energy dispatch Allows participants to hedge transmission congestion risk associated with serving load or engaging in other market transactions Preserves the value of existing investments through FTR allocation Year and month ahead forward planning reserve or capacity product Assures ability to produce energy and ancillary products Dispatch the lowest-cost resources to satisfy system demand without overloading the transmission network Provide transparent economic signals to guide short-run operational and long-run investment decisions by participants and regulators
Agenda Greetings and Introductions Introduction of the Midwest ISO Overview of the Midwest ISO Financing
Midwest ISO is 100% debt financed with no capital contributions provided by its members Form of Debt Senior, unsecured notes sold to private investors Total amount of debt sold is $505 million Notes carry various interest rates and maturity dates Keys to Successful Debt Offering Exit fee provisions of Transmission Owners Agreement Minimum Term of 5 years before exit notice can be provided Must wait for 1 year since the date of the note before exiting Obligated to pay pro rata share of financial obligations outstanding as of the date of withdrawal Cost recovery provisions of Tariff Full recovery of all costs incurred to provide Tariff services with exception of penalties for non-compliance FERC filing is required to obtain permission to recover for compliance penalties 8
The decision to participate in the Midwest ISO is driven by the owner of the transmission assets serving load/s TO participation decision Load and generation participation decisions are more limited Usually follows the participation decision of the TO Possible to not participate through pseudo-tie arrangements 9
Wholesale Power Markets Transmission Midwest ISO has a nearly complete suite of products CAISO ERCOT ISO-NE MISO NYISO PJM SPP Service Provider (Tariff Admin) X X X X X X X Reliability Coordinator X X X X X X X Transmission Planner X X X X X X X Balancing Authority X X X 2009 X X 2013/4 Real-Time Market X X X X X X X Real-Time Market, LMP 2009 2010 X X X X 2013/4 Day-Ahead Market 2009 2010 X X X X 2013/4 Virtual Bidding 2011 2010 X X X X 2013/4 Congestion Market X X X X X X 2013/4 Regulation Market X X X 2009 X X 2013/4 Operating Reserves Market X X X 2009 X X 2013/4 Forward Capacity Market X 2013-2014 Demand Response Market 2010 X X 2009 X X X Existed prior to 2008 Recent enhancement Planned enhancement X X 10